Russian MRO market reality
Speaker:
Vladimir Perekrestov
CEO
v.perekrestov@e-mro.aero
Aircraft Maintenance Russia and CIS
8th international conference
Moscow, Russia, 20-21 February 2013
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Content
• Development of Western-built aircraft MRO market in
Russia
• Russia&CIS MRO market
• Advanced market segments
• Competition in market of core products and services
• Characteristics of Russian MRO market
• Conclusion
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Development of Western-built
aircraft MRO market
1992 – Airbus A 310 was the first western-built aircraft to be operated in Russia
1996 – First time when Russian company gained EASA Part 145 approval
2004 – First С-Check maintenance on Airbus A 320 Family was implemented in Russia
2005 – 2006 –Soviet-built to Western-built large-scale fleet replacement in Russia
2005 – 2008 – High demand for engineering and technical personnel to perform
maintenance on aircraft and parts
2006 – Establishing the first EASA Part-147 approved training center to provide
engineering and technical personnel training services
2011 – Cancellation of customs duties on western-built aircraft spare parts
2011 – First D-Check maintenance implemented on Airbus A 320 Family in Russia
2012 – First Redelivery Check performed on Boeing 737 CL in Russia
2012 – Establishing the consignment stock of commercial western-built aircraft spare
parts in Russia
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Number of western aircraft in
Russia/Other CIS fleets
200
180
160
140
120
100
80
60
40
20
0
CIS
Russian Federation
Wide-body aircraft
Narrow-body aircraft
Regional aircraft
Total
RF
89
387
78
554
CIS
25
156
57
238
Total
114
543
135
792
*Source AeroTransport Data Bank, October 2012
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MRO market Russia and CIS, USD M*
Wide body A/C
Regional A/C
Narrow body A/C
Market volume Russia
and CIS, USD M
Base
Line
Modifications
Components
Engine
Total
232
357
161
393
644
1 787
* 2012, estimate made by Engineering Holding
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MRO providers in Russia and CIS
market: competition
MRO providers in Russia and CIS:
The World’s MRO providers:
Vostok Technical
Service
Analysts are forecasting competition increase among organizations which provide
MRO services on the territory of Russia
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MRO market in Russia and CIS,
capability
High
Engineering
Base Maintenance
Landing Gear
Line
Cabin interiors
Evacuation
Equipment
Labor
share of
total cost
Wheels & brakes
Thrust Reverser
?
APU
Hydraulics
Fire protection &
Oxygen
Electric Power
Cabin Systems
Fuel
Engine
Air system
Batteries
Up-front capital investments required
Low
Source: ICF SH&E Analysis
Avionics
High
Current market
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Potential market
Breakdown of Total Airline Costs – From
World Experience
Maintenance costs typically range between 7%-14% of an airline’s operating budget
Typical Airline Cost Breakdown
Fuel
26%
Typical Airline’s MRO Cost Breakdown
Mktg,
Sales
8%
Line & A
Checks;
20%
Engine;
36%
Maintenance
9%
Labor
25%
Other
22%
Dep.,
Amort.,
Rent
10%
Component, 22%
Modification, 9%
Heavy Airframe,
13%
Annual airline maintenance spend as a % of total cost will fluctuate year-to-year based on
timing of major visits (e.g. D-checks & engine overhauls), fleet age, size, mix and the price of
fuel
Source: Form 41 & ICF SH&E Analysis
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Characteristics of Russian
MRO market: Planning & IT
Airlines’ insufficient maintenance
insufficient IT support:
planning
horizon
and
• Failure to plan preparation for maintenance checks (aircraft spare parts
and labour resources)
• Increasing maintenance TAT
• Maintenance costs increase
Only 5 customers of Engineering Holding develop and provide long-term (1-2 years)
maintenance plans
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Characteristics of Russian MRO
market: spare parts stocks &
supply chain management
Absence of market players who own large aircraft spare
parts stocks on the territory of Russian Federation and
insufficient supply chain management:
• Minimum spare parts stocks for the most demanded
aircraft types
• Poorly developed aircraft parts-out business
& A J Walter Aviation
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Characteristics of Russian MRO
market: additional services
Insufficient Airlines’ attention to the technical aspects
such as:
• Aircraft interior and cabin equipment repair
• AC delivery/redelivery
• AC documentation and records keeping
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Characteristics of Russian MRO
market: changing aircraft fleet
structure
Airlines fleet renewal:
• Russian operators reduce their Boeing 737 CL fleet
• Reducing average age of aircraft
• Reducing maintenance checks man-hours
• Demand for modern aircraft maintenance
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Conclusion: Opportunities to
reduce airlines’ maintenance
expenditures
• Improvement of maintenance planning horizon
• Implementation of proper IT solutions
• Increase of aircraft maintenance outsourcing share in
segments where in-house maintenance is not cost
effective
• Growth of aircraft spare parts stocks in Russia
• Improvement of supply chain management efficiency
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Thank you for your
attention!
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